* Mr. D’Andrea and Ms. Totino-Beard had to leave the Task Force for professional and/or personal reasons. Ms. Cruz was asked to join the Task Force in July.

[Table of Contents omitted]

I. Introduction

On March 7, 2005, Worcester Mayor Tim Murray announced that 15 members of the community would participate in a Task Force that would look at the myriad issues surrounding the siting of nonprofit social service programs and examine ways to prevent erosion of the city’s tax base with the acquisition of properties where programs had been located.

Several neighborhoods had raised concerns that they had been negatively impacted from a high concentration of these agencies. In addition, City Assessor Robert Allard released a report revealing that since January 1995, 116 tax-generating properties had been taken off the city’s tax rolls when nonprofit charitable agencies, many of which are social service agencies, bought them with the intention of expanding their programs and then applied for tax-exempt status. In Jan 2005, this accounted for an estimated loss of $1.6 million per year in tax revenues to the City.

“There is little or no public process or notification,” explains Mr. Murray “causing legitimate concerns in the neighbors and creating a fear of the unknown. Often, one agency is not aware of what other agencies are doing in regards to siting so they are locating in the same neighborhoods and sometimes on the same block.”

In addition, Mr. Murray expressed concern over the steady erosion of tax dollaes. “Propery taxes are the lifeline for how municipalities provide services,” he says, “and anything that erodes that lifeline needs to be understood. The loss of $11.7 million over 10 years is a concern for everyone, including nonprofits, because they rely on our services, too.”

Co-chaired by Maurice Boisvert, President and CEO of Y.O.U. Inc., and State Representative Robert P. Spellane (D-13th Worcester District), the Mayor’s Social Service Task Force included neighborhood activists, elected officials, members of the City administration, and representatives of social service agencies.

At its first meeting on March 23, the co-chairs stressed that their goal was to prepare a report, ready for October 2005, which would reveal findings and make recommendations on both a local and state level. At all times, they emphasized a balanced, respectful, reasoned approach to the issues.

As was explained and discussed in initial meetings, both state and federal statutes specifically protext nonprofit social service agencies from discriminatory practices when it comes to siting their programs in any community. These protections provide the framework within which the Task Force proceeded.

The Task Force met 13 times over the next 8 months. Several guests were invited to share their experiences and expertise, including John Ford, former deputy commissioner of the state Department of Mental Health and undersecretary of Health and Human Services; City Solicitor David Morse; and Grace Carmark of the Central Mass. Housing Alliance.

In addition, more than 84 people spoked at two June hearings set up specifically for the public to air their concerns or support about the issues (see Addendum A). Flyers about the hearings were sent to various neighborhood centers and notices were posted in the daily newspaper to try and elicit as much public input as possible. In addition, both hearings were advertised and broadcast on Worcester’s government cable television station.

While members of the Task Force debated the various sides of the complex issue, sometimes heatedly, Mr. Boisvert suggested the importance of finding the balance between protecting the rights of the people who need these programs and protecting the quality of life for the neighborhoods impacted by the siting of such programs.

In July and August, Representative Spellane met individually with each commissioner of the pertinent agencies within the Executive Office of Health and Human Services (EOHHS) to inform them of the Task Force’s work and to solicit their ideas and input. These meetings included the Department of Mental Health, the Department of Mental Retardation, the Department of Public Health, the Department of Youth Services, and the Department of Social Services. These are the major state agencies that contract with providers that in turn establish residential and day programs in municipalities to address such issues as substance abuse, mental health, and other social service concerns.

In July, the Task Force formed subcommittees to prepare recommendations in four major areas all the while understanding that social service programs enjoy specific and broad protections under state and federal statutes:
Best practices model for siting
Legislative and municipal changes
Mapping nonprofit agencies
Payment in Lieu of Taxes (PILOT) Program

As Mr. Murray articulated his expectations: “It will be a blueprint for all the stakeholders, it will help to avoid the flashpoints and will provide transparency to recognize financial limits. If we’re truly serious about addressing chronic homelessness and substance abuse, we have to have a collective way of dealing with these issues. There has to be a regional approach and spirit. There has to be more willingness to take up an approach so the City of Worcester alone doesn’t bear the responsibility. We do have a major responsibility, but we need to have a regional approach to the solution.”

The recommendations by the Mayor’s Social Service Task Force follow.

II. Federal and State Law

The federal Fair Housing Act, 42 U.S.C. 3601 et seq., prohibits discrimination by direct providers of housing, such as landlords and real estate companies as well as other entities, such as municipalities, banks or other lending institutions and homeowners insurance companies whose discriminatory practices make housing unavailable to persons because of race or color, religion, sex, national origin, familial status, or disability.

In cases involving discrimination in mortgage loans or home improvement loans, the Department may file suit under both the Fair Housing Act and the Equal Credit Opportunity Act.

Under the Fair Housing Act, the Department of Justice may bring lawsuits where there is reason to believe that a person or entity is engaged in a “pattern or practice” of discrimination or where a denial of rights to a group of persons raises an issue of general public importance.

Where force or threat of force is used to deny or interfere with fair housing rights, the Department of Justice may institute criminal proceedings.

Discrimination in Housing Based Upon Disability Group Homes[This section is from the U.S. DoJ website]

Some individuals with disabilities may live together in congregate living arrangements, often referred to as “group homes.” The Fair Housing Act prohibits municipalities and other local government entities from making zoning or land use decisions or implementing land use policies that exclude or otherwise discriminate against individuals with disabilities.

The Fair Housing Act makes it unlawful–

To utilize land use policies or actions that treat groups of persons with disabilities less favorably than groups of non-disabled persons. An example would be an ordinance prohibiting housing for persons with disabilities or a specific type of disability, such as mental illness, from locating in a particular area, while allowing other groups of unrelated individuals to live together in that area.

To take action against, or deny a permit, for a home because of the disability of individuals who live or would live there. An example would be denying a building permit for a home because it was intended to provide housing for persons with mental retardation.

To refuse to make reasonable accommodations in land use and zoning policies and procedures where such accommodations may be necessary to afford persons or groups of persons with disabilities an equal opportunity to use and enjoy housing. What constitutes a reasonable accommodation is a case-by-case determination. Not all requested modifications of rules or policies are reasonable. If a requested modification imposes an undue financial or administrative burden on a local government, or if a modification creates a fundamental alteration in a local government’s land use and zoning scheme, it is not a “reasonable” accommodation.

There has been a significant amount of litigation concerning the ability of local governmental units to exercise control over group living arrangements, particularly for persons with disabilities. To provide guidance on these issues, the Departments of Justice and Housing and Urban Development have issued a Joint Statement on Group Homes, Local Land Use and the Fair Housing Act.

Violatins of the Fair Housing Act are enforced in federal court under the statute that requires the losing party to pay the attorneys’ fees of the prevailing party.

Massachusetts Law (a.k.a. the Dover Amendment)

In addition, section 3 of Chapter 40A of the General Laws states:
“Notwithstanding any general or special law to the contrary, local land use and health and safety laws, regulations, practices, ordinances, by-laws and decisions of a city or town shall not discriminate against a disabled person. Imposition of health and safety laws or land-use requirements on congregate living arrangements among non-related persons with disabilities that are not imposed on families and groups of similar size or other unrelated persons shall constitute discrimination. . . .”

The genesis of the court cases on the issue may well be Gardner-Athol Area Mental Health Association, Inc. et al v. Zoning Board of Appeals of Gardner et al, 513 N.E.2d 1272, 401 Mass. 12, 42 Ed. Law Rep. 381 (Mass. 1987). A nonprofit mental health corporation brought action to challenge the decision of the local zoning board of appeals that its zoning ordinance could prohibit the corporation’s use of premises for a residential care facility for adults with mental disabilities. The Massachusetts Supreme Judicial Court held that the nonprofit mental health corporation was a “nonprofit educational corporation” within the meaning of the statute, which prohibits zoning ordinances that bar use of land for educational purposes by the nonprofit educational corporation. Other cites are: John Campbell & others v City Council of Lynn & others, 616 N.E.2d 445, 415 Mass. 772, 84 Ed. Law Rep. 442 (Mass 1993); and Gary Watros & another v Greater Lynn Mental Health and Retardation Association, Inc. & others 653 N.E.2d 589, 421 Mass 106 (Mass. 1995).

III A. Best Practice Model of Siting Social Service Programs

The Task Force recognizes that this best practice model for siting social service programs is not a panacea. However, the model utilizes input from the two public hearings that were held in June 2005 as well as the current successful policy and procedures of selected agencies. In this model, the Task Force attempted to address the concerns of both the agencies and neighbors around areas of notification, openness of process, and “guarantees” about the integrity of the final outcome. Therefore, the Task Force recommends that the Executive Office of Health and Human Services (EOHHS), through its procurement process, adopt this model for the siting of all future social service residential programs.

Background

Notification: There is a consensus that all the affected parties should be informed about program plans as early as possible. Elected officials, neighbors, and purchasing state departments will all be interested in planning a successful outcome. Timing of notification is a critical issue. Clearly, early communication with all the stakeholders is vital to a successful process.

Openness of Process: In some siting situations, notification through flyers and one-to-one discussions adequateky resolve siting concerns. Often, however, public meetings are expected. It is important for everyone’s point of view to be heard in a civil environment. Everyone involved needs to agree to have a respectful, open discussion.

Guarantees: Neighbors often seek assurances and want to negotiate accomodations. Perhaps the most consistent assurance is that the program’s original plan of operations not be changed over time without additional open discussions with neighbors. Including local residents on advisory or governing bodies as well as posting bonds are suggestions for resolving this issue. In addition, neighbors often seek to ensure adequate safety or other measures through staffing or additional facility renovations for lighting, etc. If a true dialogue has been achieved these issues can be successfully identified and resolved.

A Model of Siting Social Service Residential Programs

All residential programs need to establish a set of criteria for selecting a building and location to meet the requirements of their program design and the specific population targeted for care. Phase I outlines the criteria to be assessed:

Costs (include purchase price and costs for any required upgrades to meet codes or program expectations).

Assessing appropriateness of this community and neighborhood (e.g. Is this a neighborhood with the appropriate resources, density of social service programs, and/or adverse conditions or entities present?).

When a possible site has been identified, it is important to involve all appropriate elected officials at the earliest possible point. Phase II outlines this process:

II. Early Identification of Site–Notify state representative, state senator, and congressman; notify local authorities such as selectmen, city councilors, school administrators, and local police and fire chief (if appropriate), of possible site and explain the intended use.

Explain purpose of program; staffing; experience the agency has had with this service and target population; identify the organization’s contact people; and why site is desirable.

Ask for the names of any local neighborhood activists who should be contacted early in the process to explain the program and seek support.

For the nonprofit, organizing some level of site control indicates their interest in moving forward with a particular program at a specific site. At this point, it is important to meet with neighbors to establish a working relationship that will allow for open communication. Phase III outlines some of the possible steps in this process:

III. Site Control Secured through Purchase and Sales Agreement, purchased, and/or lease.

Inform the local neighborhood (i.e with or through neighborhood associations) and make direct communication with abutters (through e-mail, phone calls, or visits) to explain the proposed use of this facility, staffing, etc. (see above).

To address reasonable accomodations for neighbors such as parking, betterments, lighting, fences, etc. The preferred process is to meet with the affected neighbors one on one. If a public meeting is held, ensure that appropriate leadership and security is present to moderate and mediate. Require nametags and that individuals speak one at a time after they identify themselves.

Offer to include neighbors on an advisory committee or governing board.

Discuss possible Site Incentive Financing (SIF) (i.e. an incentive to the neighborhood, town, or city to accept the facility such as posting a bond that will be collected if the facility is not operated according to plan or a cash payment for specific improvements to the neighborhood (parks, trees, safety, etc.). (Proposed recommendations from public hearings.)Assess depth and potential impact on clients of local opposition!

Provide/offer site visits to toehr agency programs/sites.

Provide references of neighbors and town officials of other sitings.

The final task is to open the program and schedule an open house or other process to engage neighbors and begin to be integrated in the neighborhood. Phase IV outlines the last tasks necessary to neighborhood integration:

IV. Occupy Property.

Complete renovations to meet code and program needs, including accomodations and neighbors.

Acquire occupancy permit.

Provide open house to the community.

Begin program.

Maintain communication with neighborhood through additional open houses, advocacy committees, and/or other mechanisms of collaboration.

III B. State and Municipal Recommendations

The Task Force recommendations listed below are intended to ensure that providers seek housing and integration in all communities throughout the Commonwealth with the main goal of providing their clients a range of housing choices in all communities especially those under-represented. In addition, there is a need for a strong collaboration with all Executive Office of Health and Human Services (EOHHS) agencies and contractors to share information regarding current and future program development so that communities can better prepare, integrate, collaborate, serve, and welcome clients.

Changes and Recommendations for the Commonwealth of Massachusetts

Through the Request for Responses (RFR) process and subsequent contract specifications, EOHHS will require that any agency responding to an RFR be required to include a list with distances from other social service agencies and/or a map of all social service agencies operating within a 1/2 mile radius of the proposed facility. EOHHS will review what the impact of these other agencies would be within the 1/2 mile radius.

Effective immediately all new RFFR/contracts issued by EOHHS agencies shall not exceed eight clients per residence. The premise for this recommendation is that larger contracts promote the re-creation of institutional living within a residential setting and is not desirable for individuals living with a variety of disabilities.

The Task Force believes that social service programs should be more evenly distributed throughout the state. Our recommendation for siting incentives in the PILOT section of our report is a positive approach to encouraging EOHHS and communities to welcome clients living with a variety of disabilities. Any municipality that has federal- and EOHHS-sponsored residential beds that represent at least a percentage equal to the total number of residential beds in the Commonwealth divided by the population of the Commonwealth shall be deemed a “Caring and Reponsible Community.” Once adopted, this will be known as the “Caring and Reponsible Community Statute.” EOHHS will be expected to review the impact of programs in communities that have already reached this Caring and Responsible benchmark. In addition, EOHHS will develop policies and other incentives to encourage agencies and communities to be Caring and Resposible.

EOHHS will coordinate the creation of a Residential Program Inventory for all communities within the Commonwealth. The inventory will be for all programs funded and/or operated by all agencies of EOHHS. The Department of Revenue’s Bureau of Local Assessment last updated the “Property Type Classification Codes” during November 2002. The BLA should create a new exempt class code to identify the specific use of tax-exempt social service residential programs.

Recommendations for the City of Worcester

The City of Worcester will appoint a Social Service Agency Liason. This individual will be responsible for, but not limited to, the following:

Communicate community needs and assessments with state agencies and local social service providers.

Establish an inventory of all social service agency programs within the city. Assessors will properly classify each with the new code provided in I-D above. [The BLA code.]

Once inventoried and properly codified, the liason will transmit each municipality’s list to the appropriate state agencies and local social service providers who need to submit information about other sites as part of a response to an RFR. The list will not be made available for other use.

Social service agencies will provide an annual report/summary of all services they are providing within the City of Worcester. The liason will be responsible for receiving and updating this information.

Social service agencies are requested to notify the liason if a particular residential program is changing its program at a specific site.

People in Peril (PIP) Shelter

The Task Force recognizes that longstanding, seemingly intractable problems associated with the PIP Shelter have affected the views of many community members about siting social service programs and, in particular, about services for people with substance abuse issues. The Task Force made a deliberate effort to distinguish the PIP’s operations and issues from other programs. For example, the PIP Shelter at 701 Main Street is licensed by the City as a lodging house. Its site and operations are not subject to the protection of Chapter 40A, which is also known as the Dover Amendment. Many complaints about the Dover Amendment were raised with the Task Force, indicating that the state should not have this level of protection in place for “wet shelters” such as the PIP. The Task Force, therefore, believes it is important to clarify that the Dover Amendment does not cover the operation of a homeless shelter such as the PIP, whether the shelter accepts clients under the influence of substances (a.k.a. “wet”) or not. Rather the Dover Amendment protections extend to programs that have a specific “educational” purpose.

The Task Force is interested in assuring that the problems associated with the PIP Shelter do not inappropriately color the public understanding of public policy about other social service programs. The Task Force finds the ongoing specific concerns about the PIP Shelter significant enough to make the following recommendations:

The Task Force recommends that the PIP Shelter run by South Middlesex Opportunity Council (SMOC) located at 701 Main Street downsize to a population of 50 individuals per night.

The PIP shall relocate with the consent and advice of the City to a new location and cease shelter operations at 701 Main Street no later than June 30, 2007.

The Mayor and City Manager shall appoint a regional committee within 60 days to work with SMOC to accomplish the objectives outlined above.

III C. Mapping Social Service Agencies

This map gives a visual representation of where social service agencies are located within the City of Worcester. The Task Force used the property classification system established by the Massachusetts Department of Revenue (DOR) to determine what properties can be properly labeled as “charitable organizations” or “private hospitals” within the same property class code of 905. The Task Force extracted all parcels having a state property class code as 905 from the city’s assessing records and then plotted those parcels, with a few exceptions and a few additions, on the attached map. [For a copy of the map, see this 300K PDF: map]

The locations identified in the map are defined as any facility owned and occupied by a tax-exempt social service agency or by a state-run human services department. This definition includes facilities in which clients reside and receive support services, and/or facilities in which the agency is located and clients reside and receive services. The size of the program, the type of clients served, the nature of the services, or other characteristics within any of these services are not designated.

Locations where agencies rent their facilities from taxable entities (landlords) are not identified on the map. The effect of these omissions is not clear. While the map thus does not include every possible social service agency program site or location, it is reasonably representative of a “picture in time” for the location of the current social service system within the City of Worcester. In addition, the use of the DOR definition accompanied by this map can be used going forward for future trend analysis.

The location, size, concentration, and type of program were the subject of much debate in the public hearings and within the Task Force. Currently, both sides of the debate only have anecdotal evidence to support their point of view. Based upon these discussions, the Task Force recommends that an in-depth independent study of the social and economic impact of these programs on the city’s neighborhoods be completed. Perhaps the UniverCity Partnership can take on this task as one of its contributions to the City.

III D. Payment in Lieu of Taxes (PILOT)

The purpose of this section is to identify reasonable Payment in Lieu of Taxes (PILOT) or PILOT-like options for generating compensating revenue to the City for properties that have been or will be removed from the local tax rolls.

This report balances desired outcomes with probabilities of adoption in an effort to develop a reality-based menu of options. Rather than a “one size fits all” approach, this report offers several recommended discussion points for the City administration, our local legislative delegation, and tax-exempt social service agencies.

The Task Force considered recommending changes in federal and state laws that would eliminate or reduce local taxt exemptions for nonprofit corporations. This discussion resulted in a consensus opinion that this was not a viable strategy and was beyond the scope of the Task Force.

The recommendations focus on three achievable categories: state PILOT options, state incentive options, and local PILOT options.

Background

It is recognized that any participation by social service agencies in a PILOT program is voluntary, since by federal and state statutes, nonprofit (501(c)(3)) organizations are exempt from payment of local taxes.

However, all municipalities are required to provide basic public services, including public safety, to individuals and businesses residing within their boundaries. Local taxes are a significant means through which these services are funded.

Due to the costs to provide these services and the impact of lost revenues related to property removed from the tax rolls, the City seeks relief from passing the increasing costs of providing basic services to the taxpayers. The recommendations made in this report are directed to (1) the Commonwealth that contracts for many of these social services based on a community-care model and (2) the tax-exempt social service agencies themselves.

This report recommends four options for social service agencies to participate directly in helping to fund the cost of providing basic services in the City.

Recommendations for the Commonwealth of Massachusetts

Seek legislative changes to establish a State PILOT program to provide state reimbursement directly to municipalities.

The state makes an annual PILOT directly to municipalities for all state-funded “continuum of care” services that are provided in tax-exempt properties (sheltering, treatment, transitional, supportive, counseling, etc.).

This would be accomplished by creating a line item on the local Cherry Sheet for direct payment to each municipality. The amount would be calculated using the current state reimbursement rate used for state-owned land PILOT payments to municipalities.

The current reimbursement rate is $14.06 per thousand dollars of assessment. Thus, the state would have a line item for nonprofit social services agencies, tax-exempt reimbursement that is calculated at $14.06 per $1,000 of the assessed value of all nonprofit social service agencies, tax-exempt properties where state-funded services are funded. The State of Connecticut currently has a PILOT similar to this recommendation.

Seek legislative changes to establish a State Incentive Program similar to the affordable housing incentive program in Chapter 40B, subsection R.

In recognizing the difficulties in siting social service programs, it is important that the Commonwealth provide incentives to all municipalities to host social service programs by providing fixed dollar amounts directly to municipalities at the time of contract award.

The amount of the incentive award should reflect the Commonwealth’s priorities and the potential local impacts.

Recommendations for the City of Worcester

Seek negotiated agreements with social service providers for a City of Worcester Social Services PILOT. These written agreements would be negotiated directly, agency by agency, through the City administration and each nonprofit organization. Suggested options are:

Social service agencies acquiring new properties do not seek exemption for properties, but rather keep them on the tax rolls by not making annual application for exemption (through form 3ABC). This option would not necessarily require a written agreement with the City.

Similar to item 1a, social service agencies do not make annual application for tax exemption on currently owned properties.

For social service agencies choosing to make application for exemption, they enter a written agreement with the City to participate in a voluntary PILOT by funding a position or a project cost within a City-developed strategic initiative. This funding should be a fixed dollar amount for a specific number of years. Under this option there would be no effect on the tax exempt status of the social service agency’s properties.

Social service agencies enter a written agreement with the City to participate in a voluntary PILOT by contributing to the City’s General Fund. The PILOT is calculated as 18% of the property tax rate on the assessed property value calculated annually.

Other successful PILOT programs have used the annual budget percent of local tax levy funded costs for providing police, fire, communications, code, and public works as the basis for a PILOT payment. In Worcester, for fiscal year 2006, the tax levy cost for the city for these basic services is 18.28% of the total tax levy budget. It is expected that this percentage will not vary much from year to year.

If the property removed from the tax rolls is residential, the residential tax rate would be used in the calculation; if the property is commercial/industrial, then the commercial tax rate would be used in the calculation.

[Addendum IV-A, “Public Testimony” is omitted. It is a list of those who spoke at public meetings on June 15 and June 23, 2005. ]

Addendum IV-B, Worcester Social Service PILOT Calculation

An example of the PILOT payment calculation follows: A social service agency purchases a residential property with an assessed valuation of $300,000. The agency would pay the city a PILOT equal to 18% of the current $13.18 residential tax rate. A $300,000 home that is fully taxed would generate $3,954 in taxes. Under this PILOT option the social service agency would pay 18%–or roughly $711–to the city for that year.